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Euro (EUR) Trims Gains Vs Pound (GBP) on Second Day of Positive Sterling Movement

European Union news

  • Euro slips along with Eurozone confidence – ‘Brexit’ talks rumble on without UK
  • German confidence trumps expectations – Rise seen against predicted stagnation
  • Pound stable on post-‘Brexit’ week – UK house prices rise on the year
  • UK credit stats on the way – Eurozone confidence printings to arrive shortly

After edging away from recent highs on Tuesday, the Euro (EUR) exchange rate held declines against the Pound (GBP) as Wednesday’s trading progressed.

The single currency started the day on a soft note, having declined against the Pound by a small amount and more generally against its other peers. One notable development of late has been the attendance of David Cameron at his final EU meeting which, barring any emergencies, represents the last contribution of the PM in this area.

David Cameron opted to resign his post last Friday after the UK voted to leave the EU.

In terms of domestic data, German Gfk consumer confidence in July has risen from 9.8 to 10.1 against predictions of stagnation, while from the UK, the Nationwide housing prices for June have risen from 4.7% to 5.1%.

Looking ahead, the pairing could be influenced by a glut of Eurozone confidence printings for June which are coming in presently, as well as by the imminent UK lending results for the month of May, which have mixed results on the cards.

(First published 06:30 June 29th, 2016)

The Euro has been trending at its best rate against the Pound since March 2014 in the aftermath of the EU Referendum, although the common currency slumped against the Pound towards the end of yesterday’s European session.

The Pound has actually been able to accomplish a surprising rally lately, although given the circumstances behind it, this uptrend may prove short-lived.

Eurozone Economic News: Draghi Caution and Domestic Printings Leave Euro Mixed Overall

The appeal of the Euro to investors has been contentious of late, with the single currency fluctuating notably against peers. These sporadic movements have been highly diverse, consisting of gains of 0.5% against the Canadian Dollar (EUR/CAD) and the Swiss Franc (EUR/CHF) as well as a 1.4% rise on the Japanese Yen (EUR/JPY). Less favourable have been drops of -0.4% against the Pound (EUR/GBP), -0.6% against the Polish Zloty (EUR/PLN) and -1% against the South African Rand (EUR/ZAR).

This diverse performance has been partly influenced by overseas currency movements; the US Dollar, which was previously strong and holding the Euro down, has since flopped on profit taking and allowed the Euro to rise up in some pairings.

A lesser amount of support has come from home; yesterday brought a speech from European Central Bank (ECB) President Mario Draghi in the morning, who tactically avoided mentioning the Referendum, although this ultimately served to concern investors.

An additional source of input for the Euro came in the morning when French and Italian confidence stats for June came out alongside Spanish retail sales. These were mixed overall, which failed to generate any lasting amount of confidence in the common currency.

Pound Sterling Bounces Back in Desperate Bid to Reclaim Pre-‘Brexit’ Rates

The Pound’s most recent movement has gone against convention, with what can only be described as a rally occurring for the UK currency.

The latest UK economic news has hardly been positive for the Pound, but in spite of this Sterling has been able to record gains of 0.3% against the Euro (GBP/EUR), 0.7% against the US Dollar (GBP/USD), 0.9% against the Swiss Franc (GBP/CHF) and 1.6% against the Japanese Yen (GBP/JPY).

Domestic news, by all accounts, should have been harmful to the Pound, with news coming that three ratings agencies have cut their credit ratings for the UK after ‘Brexit’ coming from Friday to Tuesday. However, the UK unit managed to register bullish appreciation against the Euro yesterday.

GBP Pound exchange rate

Future EUR, GBP Forecast: Could Eurozone Confidence Data turn the Euro Bullish?

The near-future will bring a glut of Eurozone confidence stats for June, covering the currency bloc as a whole as well as virtually all of the major member nations.

The general sentiment is that gains will be recorded, although whether this is enough to push the Euro up against the Pound remains to be seen.

In the early afternoon, the Euro could be further influenced by Germany’s June inflation rate stats; on the year, a rise from 0.1% to 0.3% is expected.

From the UK, lending stats for May are due; in this field, the Bank of England (BoE) consumer credit printing is forecast to rise to £1517.7m, while mortgage approvals during the same month are expected to have fallen from 66.25k to 65.6k.